Monthly Archives: September 2014

Based in the firm’s New York offices, Kroszner’s hire is part of the firm’s plans to build out its CLO investment strategy. The firm has traditionally invested in residential/commercial whole loans, RMBS, CMBS, and Agency MBS.

Kroszner had worked as a CLO strategist at RBS since June 2011. – Sarah Husband

The business is expected to launch in the first quarter of next year. The team will focus on loans to companies generating EBITDA of $3-50 million. The new direct-lending business will collaborate with Angelo Gordon’s corporate credit team of 27.

Williams and Clark co-founded the direct-lending business at Madison Capital, a subsidiary of New York Life. The pair will be based in Chicago. Each of them will join the firm as managing director.

“[We] believe the current opportunity to help close the funding gap for middle market companies is substantial,” said Michael Gordon, co-founder and chief investment officer of Angelo Gordon.

Previously, Clark was CEO at Madison Capital Funding, and oversaw all operational and strategic activities of the middle-market lending operation. He also held various positions in loan underwriting and origination at Antares Capital, GE Capital, and Bank of America.

Williams had been co-founder and senior managing director at Madison Capital Funding, and was part of the executive committee and group head of specialty lending. Prior to Madison Capital, Williams held positions in loan underwriting and origination at Cochran, Caronia & Co., GE Capital, and Bank of America.

“We see a great deal of opportunity in lending directly to the middle market as the shift to non-bank lenders continues to grow,” said Williams. “Banks continue to have a low appetite for risk and the high yield market isn’t open to these companies.”

Europe saw the bulk of the action this week, pricing three new CLO transactions, against two for the U.S. market. The ABS East conference, taking place at the start of the week, dampened new-issue activity stateside, leaving the European CLO market to step into the spotlight on two counts: supply and spreads.

In the third quarter, the investor base for new-issue leveraged loans grew even more dependent on CLO funding amid (1) retail outflows from loan funds and (2) ongoing reticence by banks and securities firms to play in loans in which they don’t have an arranger role.

Banks, in fact, were again bit players during the first three quarters of 2014, taking a record-low 9.9% of non-arranger allocations to leveraged loans, according to LCD’s analysis, down from 14.1% in 2013. Banks’ share in the third quarter was in line, at 9.8%.

Cash outflows from bank loan funds totaled $382 million during the week ended Sept. 24, narrower than $583 million in outflows last week, but a slight uptick from the $341 million outflow recorded two weeks ago, according to Lipper.

The influence of bank-loan ETFs on this week’s number was 12%, or $48 million. This compares to an outflow of $16 million from ETFs last week.

There now have been 22 weeks of outflows over the past 24 weeks, for a total outflow of $11.9 billion over that span, which follows a record-shattering 95-week inflow streak that totaled $66.7 billion.

The trailing four-week average gaps out slightly to a negative $435 million per week, from negative $414 million last week. This measure remains below the recent peak of negative $858 million from the week ended June 11.

The year-to-date fund-flow reading pushes deeper into negative territory, at $4.8 billion, based on a net withdrawal of $5.2 billion from mutual funds against a net inflow of $395 million to ETFs. In the comparable year-ago period, inflows totaled $44 billion, with 11% tied to ETFs.

The change due to market conditions was negative $217 million, versus total assets of $102.4 billion at the end of the observation period. The ETF segment comprises $8 billion of the total, or approximately 8%. – Joy Ferguson